British personal loan market releases best offerings in a decade

The period after Christmas is typically characterised as a financial haven for credit and loan providers across the UK as institutions go all out to attract as many new customers who may be feeling the financial strain of festive overspending. The credit card market has already released an abundance of attractive deals this January, but it can be argued that it is the personal loan market that is producing the greatest offerings this winter.

The Personal loan market has been booming for months now, with the Bank of Englandís policy making low interest rates on loans and inevitability. With the base rate of England being kept at 0.5%, interest rates have decreased by 0.1% almost every month in the personal loan market in recent times, and the Funding for Lending scheme has made competitive loan deals an easy decision for banks to make.

However, the likelihood is now that rates have reached or are close to reaching as low as they can go, meaning that at some point in the next 15 months, acquiring a personal loan will become a lot more expensive than it is now. Rates will probably move around 0.1% lower in the next few weeks, but will then most likely stabilise and remain at the current level for the remainder of 2014. With the Bank of England moving the money from their Funding for Lending scheme away from loan and mortgage distribution and into small business start ups, it is almost certain that interest rates on personal loans will rise in 2015, so you have around 12 months to capitalise on low interest rates and acquire a personal loan that may actually represent good value.

Interest rates on personal loans are at a decade low, and it is about acting fast so that you can save as much as possible on your personal loan. But which deals are the best on the market at the moment and which stands out the most? Below is a detailed insight into the best personal loan offerings currently on the market at the moment, so you can make a decision that will maximise the amount you save in the future.

With all the suggestions, it is important to remember that the interest rate is defined through APR, meaning that all rates are representative rather than being entirely concrete. This means that of the total applicants, at least 51% will receive a personal loan deal with the APR rate, but keep in mind that there is a chance that you may have to pay a higher rate in certain circumstances.

Sainsburyís Bank

Sainsburyís bank currently offer the best deal on personal loans between £7,500 and £15,000 with a 4.6% APR package that truly makes the prospect of affordable monthly repayments possible. The deal lasts up to 3 years, though users can enjoy a highly competitive 4.7% interest rate if they wish to extend that term up to five years. You must be a nectar card holder in order to qualify, and have to the end of the January to sign up for the deal before it expires.

The 4.6% APR attached to the loan is remarkable considering that it was not that long ago that most personal loans displayed a 7% rate, and it is unlikely that interest will get much lower than this. If you were to borrow £7,500 through this deal, the total interest charge you would have to pay over three years would be just £532, whilst your monthly repayments would be set at an affordable £223. This makes the idea of affording a new vehicle or expensive item a potential reality because you can finance it through 36 affordable monthly repayments.

Another great feature of this deal is Sainsburyís pledge that any new deal that is better than the one you sign up for will be matched by Sainsburyís and exceeded by 0.1%. This means that if a 4.4% loan came out later this month, that you would automatically enjoy a 4.3% interest rate on your current deal! Again you must be a nectar card holder, though obtaining one is relatively easy if you visit your local store. Considering the flexibility of the arrangement, as well as how sustainable even the largest bracket of monthly repayments are, this is definitely worth considering if you are looking to purchase a new car, television or holiday.

Tesco Bank

Not content with offering some of the best credit card deals on the market, Tesco Bank unveiled a 4.8% personal loan deal that enables users to make repayments over a five year period. Borrowers are able to obtain between £7,500 and £15,000 with this deal and the rate will remain fixed for the duration of the loan period. Although the rate is higher than Sainburyís, it nevertheless represents excellent value, and someone borrowing £10,000 over 5 years would have to pay just £187 each month, equating to just over £1200 total interest. The longer term makes Tescoís offerings supremely attractive, and is definitely worth considering if you wish to acquire a personal loan. The deadline for application is February 5th though so if you are interested, then it is about acting fast to capitalise on the excellent value the loan represents.

Tesco also have competitive but more expensive deals on smaller and larger personal loans that you may be interested in, with deals between £5,000 and £7,500 as well as between £15,000 and £25,000 having a 6.4% rate attached to them.

Clydesdale Bank & Yorkshire Bank

After Sainsburyís, Clydesdale and Yorkshire bank has the next best personal loan offering on the market for deals between £7,500 and £15,000. Currently, a 4.7%, five year maximum package is being offered that is available to both new and existing customers. The rate means that someone borrowing £10,000 for 5 years would have to pay just £187 a month to maintain repayments.

There are also competitive deals for larger loans, with five year deals for sums between £15,000 and £25,000 having a 6.6% APR attached to them, though smaller loans should be avoided as the rates are particularly high.

There are probably better deals however if you are someone who likes to overpay, because you will be charged 58 months of interest if you pay off your loan early.

Notable others

M&S bank have a personal deal that matches the 4.7% APR of Clydesdale & Yorkshire bank for personal loans between £7,500 and £15,000, though it should be noted that you must be an existing account holder in order to qualify for this deal. If you are not, then you will be offered a 4.8% APR loan, which still represents great value. The loan terms lasts up to 5 years, and your rate will remain the same throughout the deal.

HSBC also offer a similar deal, with personal loans between £7,500 and £15,000 being offered with a 4.8% APR and on a five year basis. An £8,000 loan for 5 years would involve monthly payments of £150, whilst you are able to overpay if you wish.

The AA bank has a competitive deal for its existing customers that grant them 5 year, 4.8% APR personal loans that have a fixed rate. New customers are only entitled to a 4.9% rate, both existing and new customers are given a free six month home emergency response offer. Overpayments are allowed, though you will have to pay 2 months interest if you clear your outstanding balance early.